2 Monster Stocks Nancy Pelosi Just Bought

Depending on what source you read, Nancy Pelosi has a net worth of close to $200 million, making her one of the richest members of Congress.

With a knack for figuring out how to build wealth, her portfolio is naturally tracked carefully. We decided to investigate what stocks she just added to her portfolio.

2 Stocks Nancy Pelosi Just Bought

Nancy Pelosi may be a politician but her stock picking skills rank among the best investors. As evidence of that fact, we point to the most recent two stocks that are so good even Warren Buffett has given them his seal of approval.

So without further ado, what are the two stocks Nancy Pelosi just bought? Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT).

At first glance, you might spot that Buffett owns only one of these two stocks, Apple. However, he has previously stated that his close relationship with Bill Gates is a reason for steering clear of Microsoft.

It’s not that he doesn’t see the Seattle-headquartered firm as having a wide moat, and meeting other criteria that warrants a purchase, but rather he won’t risk the perception of having insider information.

Former Speaker of the House Pelosi, on the other hand, is free from such constraints and made two large purchases.

Let’s address the Apple purchase first.

Nancy Pelosi Buys Apple

The first thing we need to highlight is that Nancy Pelosi’s husband is keenly involved in her investment activities. Indeed that was made clear in a recent filing when it was reported that he exercised call options on Apple prior to their expiration.

The purchase of 5,000 Apple shares at the time amounted to a total just shy of $1,000,000 of Tim Cook’s firm. To be precise, it was $930k.

Notably the options themselves rose in value substantially from the time of their initial purchase. It’s estimated they climbed in value by approximately 30-40%.

The decision to convert the call options to shares is a sign that the Paul Pelosi, who exercised them, expected Apple share price to further rise. And he was right. From the time of the transaction, Apple climbed all the way to $200 per share.

By keeping Apple stock versus options, Pelosi signaled a willingness to stick with the position for the foreseeable future. That seems like a smart decision given Buffett’s own confession that his partial sale of Apple stock a few years ago was a mistake he won’t repeat anytime soon.

Like Buffett, Pelosi has likely and astutely analyzed Apple’s pricing power, which is enormous. Buffett once said that if a household had to give up a second car or their phones they would likely choose the former.

He also stated that Apple could raise prices to $5,000 per device and likely not see too much reduction in demand. 

Of course, it’s unlikely Apple does so anytime soon but it wasn’t too long ago when the idea of a $1,000 phone was ludicrous. Nowadays that tends to be the cheaper iPhone.

Why Did Nancy Pelosi Buy Microsoft?

When you combine the purchase of Apple and Microsoft stock via the exercise of 50 call contracts each, corresponding to 5,000 shares each, the amount of Microsoft stock owned by Pelosi was reported at $1.7 million. And the value of the two positions grew by almost $600,000 from the initial time of purchase to over $2.6 million.

Like Apple, Microsoft has a wide moat and is operationally extremely efficient. Where Apple dropped $22.7 billion of its $81.7 billion to the operating income line item, Microsoft eclipsed it by reporting $24.3 billion on $56.1 billion of revenue.

Since Satya Nadella took over as CEO at Microsoft, the company has made very strategic moves to pivot to the Cloud, enter the world of artificial intelligence through its stake in OpenAI, and expand its reach in gaming by acquiring Activision.

These are but a few of the strategic initiatives that Microsoft has been pursuing and collectively the firm has gone from strength to strength, increasing revenues, profits, and raising its dividend for 18 years straight.

Even with a market cap of $2.3 trillion, analysts see upside potential to $393 per share, which would represent 23.1% upside.

Why Did Nancy Pelosi Buy Apple and Microsoft?

Nancy Pelosi isn’t just a shrewd politician, she’s a savvy investor too. Her decisions alongside her husband to buy Apple and Microsoft are rooted in an expectation that both companies will go from strength to strength over the long-term.
By exercising shorter-term call options on both stocks, Pelosi signaled that further upside potential was on the horizon, and that she was willing to hold them for the long-term.
When we examine the two companies’ financials we can see that they each drop enormous percentages of their revenues to operating income, which in turn allows them re-invest and expand.
For Apple, it is expected to launch its Vision Pro at a price of almost $3,500 in 2024. Microsoft, on the other hand, is expanding its footprint via acquisition of Activision and taking stakes in companies like OpenAI.
Together the two companies have very wide moats, so that neither is likely to be disrupted for the foreseeable future. For Pelosi that means predictable investments that are likely to yield returns for as far as the eye can see.
If Nancy and Paul Pelosi had to pick two companies to hold for the long-term, they could hardly do better than picking Apple and Microsoft. To add further credence to that argument, Buffett’s Berkshire Hathaway has allocated a full 51% of its equity portfolio to Apple alone, a high vote of confidence if ever there was one.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.